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State-tribe compact is option in tax fight 

States such as Washington, New York and Oklahoma have made political decisions that have allowed tribes to sell cigarettes.
Jump to full article: Providence (RI) Journal-Bulletin, 2003-07-21
Author: MICHAEL CORKERY / Journal Staff Writer


Before the Charlestown melee last Monday, state officials said the Naragansetts' sale of tax-free cigarettes undercut a vital source of state revenue. Governor Carcieri insisted the state had the right to tax those sales.

Governors around the nation have made similar arguments over the years, but after some nasty court and street battles, many states have compromised on the issue.

Washington state has battled over cigarette sales with some of its 29 Indian tribes since 1980. The state finally devised a compact with the tribes in 2001.

Under the Washington compact, the tribes must charge the equivalent of the state's cigarette excise tax and sales tax, but the tribal government can keep that revenue. . . .

In Oklahoma, the issue was settled, in part, by the U.S. Supreme Court case Oklahoma Tax Commission v. Citizen Band Pottawatomi Indian Tribe of Oklahoma.

In that 1991 case, the state argued it can tax cigarettes sold by tribal businesses to nontribal members. But it cannot tax cigarettes sold by tribal members to fellow members. . .

Last Thursday, the New York state tax department revealed plans to go after non-Indian consumers of tax-free cigarettes rather than the Indian business because it fears violent protests by the Senecas.

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